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Car Sharing Killed the Taxi Star

Uber and Lyft are here: Does that mean taxis will disappear?



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For technology companies, a key goal is to disrupt the status quo.

Think about it: The spreadsheet disrupted the accounting industry. The iPhone changed cellphones. And Tesla is working to change our views on driving electric cars.

This April, New Orleans felt the shockwaves of another tech disruption with the City Council’s passage of legislation allowing operation of Uber and Lyft.

If you are not familiar, Uber and Lyft are ride sharing or transportation network companies. Using a smartphone, you can request a driver pick you up and take you where you need to go. The app offers real-time tracking of the driver and passenger’s location. As you wait, you can watch your driver navigate with a small car icon overlaid on a map of the city. Once the car arrives, hop in and you’re on your way. At the end of each trip, the transaction gets charged directly to a preselected credit card on file.

Unlike with a taxi, cash is never a factor, wait times are always evident, and better yet, there’s never a need to stand on the corner waving, hoping to hail a passing taxi.

In most markets, drivers for Uber and Lyft are not full-time workers like normal cabbies. Uber has long offered a service, even in New Orleans, for black car and limousine pickup, but recently passed legislation allows private individuals to become part-time drivers. With the new service, anyone can spend a few hours after work or on weekends as a human courier and earn some extra cash.  For Uber and Lyft, this allows them to charge cheaper rates.

How much cheaper, you ask?

Taxi cabs in New Orleans cost a $3.50 base fee plus $2 a mile,  $1 for each additional passenger and $1 a minute for waiting. Uber X (the cheapest of Uber’s services) starts with a base fare of $1.75 plus $1.35 a mile and .25 per minute for waiting.

But beware surge rates! Uber uses a special formula to determine peak periods — when fewer drivers are available. During these periods, when demand is high, Uber will multiply the per-mile rate.  Many news outlets have reported stories of extreme rate increases during disasters, or large events (think JazzFest).  

As can be expected, the taxi group getting disrupted is not happy, and in a way, the City Council has created an uneven playing field for traditional taxis. Of course, this begs the question for taxi drivers: Why not quit and join Uber or Lyft?

For travelers, relying on part-time citizens as drivers does have a notable setback. In major cities like New York or Washington, D.C., where Uber and Lyft are more established, drivers who don’t know the area well have gotten lost. While many taxi drivers study city maps, a new part-time driver may not know the back alleys of the Garden District or how to maneuver eastern New Orleans. A friend of mine in Washington, D.C., once found herself 20 miles from home after her driver got lost. She eventually made it home, but not without losing time — time she may not have lost with a taxi.

Will having a smartphone or computer become a requirement for transportation? If so, what about people without a smartphone, or the elderly, who may use a taxi to get groceries?

In the end, car-sharing services may be just a blip on the radar.  Many have prophesied that car ownership itself is ready to be disrupted as every major car manufacturer is readying a self-driving car.

Imagine, in the near future you could say into your watch: “Send a car to come get me,” and within minutes, one of a fleet of self-driving cars would arrive, ready to whisk you to the next destination — for a monthly fee, of course.
 





Jason Perry  is Director of the Drupal Practice for Fig Leaf Software. Maybe you will be his Uber driver from Ms Mae’s to New Orleans East? In the meantime find him on twitter at @jasonmperry or email him at me@jasonmichaelperry.com.